This episode of The Money Compass podcast was published on 22nd March 2023. You can listen again by heading to our Episodes page, or on your favourite podcast player.
Emma Knights and Lukas Spyrou are joined by a special guest, Ralph Hunt, one of our financial advisers at Face to Face Finance. Ralph explains the questions he is commonly asked, particularly by his newer clients, and explains why these questions always come up.
WHAT COMMON QUESTIONS DO YOU FIND YOURSELF ASKING YOUR FINANCIAL ADVISER?
Lukas Spyrou
In today’s episode, we have a very special guest with us, Ralph, who is one of our senior advisers here at Face to Face Finance, and he is going to tell us a little bit about some questions that he is commonly asked, particularly by newer clients. Ralph, take it away.
Ralph Hunt
Thanks for that fine introduction, Lukas. I particularly like the fact that I’m a senior adviser, or another word for old. Generally speaking, the questions are as follows, “can I lose all my money?”, and like you said, that’s really what happens when we have new clients. Can I lose all my money, especially if the money is coming from cash or a bank account. I always ask them this. I say to them, and I pretty much know the answer, “would you be unhappy if you lost all of your money?”, and they say, “Yes, we would be very unhappy”.
Emma Knights
Can’t blame them!
Ralph Hunt
Yes. I said, “would you phone us up?”, and they said, “yes, definitely, we would phone you up”. I said, “well, your phone wouldn’t be working, because that company would be extinct”. I said, “you wouldn’t get in your car, because you wouldn’t be able to fill it up with petrol because, that company would be extinct”. With traditional investments, they are invested in places you can see, things that you know. You may not know all the companies, they would also be invested in governments because, again, with most investments, they have what is called asset allocation, which is a posh word for saying your money is spread around. So, you would have some in shares, and you would have some with governments.
People who want to borrow money, they are not like us. When we want to borrow money, we go and beg the bank manager and say “please give me some money, so I can buy this house”. When you are a major company, you don’t do that, you go and borrow money from what we call the markets. So, that is really “can someone lose all their money?”. The answer is no, because it would be the end of civilization. My last parting thought with them is, you would only be interested in how many potatoes you could grow in your back garden, if you lost your money, because everyone would have lost theirs as well.
Lukas Spyrou
In a nutshell, it is highly unlikely that you are going to lose all of your money in an investment…
Ralph Hunt
It is impossible. The other one is, “Ralph”, and they have noticed that I have grey hair. They say to me, “what happens when you retire?”. I point across to Emma, and go, well, that is my succession plan. I think it is important that advisers have succession plans. I know with you, Lukas, you are a succession plan. It is important that the clients can see what the future is because we actually pick up clients every year from people who are pretty much being dumped, because their adviser has left or retired. There is no forethought about what is going to happen when they retire. I do feel sorry for the clients because we have long term relationships with them.
Lukas Spyrou
I agree with that. I mean, I’m sure Emma does. For us, going out with yourself and Bob, and meeting the clients nice and early, before as you say, eventually when you guys do retire, it helps us establish that relationship. It’s not just as if we have been dumped on someone. So from our point of view that’s brilliant, I think and I am sure Emma would agree with that.
Emma Knights
Definitely. I do always like to bring a smile to the clients face though, when Ralph introduces me and they look at me physically as if to say, well, who are you and what are you doing here? I like to tell them that I am Ralph’s carer, so I am not really there to do anything other than just follow Ralph around and make sure he is okay and look after him.
Ralph Hunt
Make sure I don’t eat too many biscuits.
Emma Knights
That’s very true.
Ralph Hunt
The other one is pretty much linked to retirement but less happy for me. I call it death, it is pretty much unrecoverable from. If they say, “well, what happens if anything happened to you?” which is such a nice way of saying whatever happens if you die? I just really point to Emma. If there are even existing clients who notice that I’m getting older, I say well, you have already met Emma, Emma would just take over and they all seem happy for that. Unfortunately, a bit too happy sometimes when I knock on the door, on my own, allowed out, and the first words out of their mouth is not “Hello, Ralph”, it’s “Oh, well where is Emma?”.
Lukas Spyrou
She must be doing a very good job then.
Ralph Hunt
She is doing a very good job, unfortunately. Another one, “well, what happens if Face to Face Finance goes bust?”, that is quite understandable, because people think that we are actually looking after their money, that we have super control over it. The fact is, we don’t, we actually don’t touch client money. It never arrives in our bank account before it goes to an investment. It literally goes from their bank, directly to their investment and those investments are regulated by the FCA just as we are. So I always say, well, we wouldn’t be very happy if we went bust but from your point of view, on day one, you would have 100% of your money with us back and if we went bust on day two, that money in total will still be there. With more modern products, they have got online access. So, they can always see them anytime they want.
Lukas Spyrou
So, they can still view it as if they would with a banking app or something like that, they can still physically see where their investment and what it is invested in.
Ralph Hunt
Yes, they can look at it. And again, that comes back down to, “can I lose all my money?”. A lot of the time with a bank account, they can see it, they get a monthly statement, or they can look online and that sort of thing. Then with an investment, it is like they are giving the money away. I always find it funny when people can say, “oh, can I have some money?”, and I point out that actually it is their money. But it is almost as though they have given it up. Online access to the more modern products now gives them access to see changes unlike a bank account, it’s moving up and down all the time, every day. It is amazing how many people start looking at it, and then after a couple of weeks, they are not interested because they just see it going up and down.
Lukas Spyrou
I know when we have been out with clients, I’ve often had people ask about the £85,000 limit of having their money in one place, as if that is all they can have. What would you say to someone who asked about that?
Ralph Hunt
I think you should keep to the limits because you never know what is going to happen. But from a going bust point of view of the banks and building societies, I really think that governments can’t allow that to happen. Now I know in 2008, a couple of American banks went bust and clients were very concerned about them, but they weren’t normal banks. You couldn’t go in and open a bank account yourself, they were investment banks. Unfortunately, they have the word bank, so people automatically think, “oh, why haven’t I got it”. I remember when Northern Rock had problems and people were queuing and I thought, I don’t understand why they are queuing because I am in the industry. I know they don’t have a pile of money, it’s electronic.
Emma Knights
I must admit, when I worked at Norwich and Peterborough, I was very disappointed when I first started to not go out the back of the branch and find a huge vault full of money. It was just a very small conservative safe with enough money in to get by, very disappointing.
Ralph Hunt
I was disappointed when I broke into Norwich and Peterborough and found that same safe and thought, no, I will have to continue as a financial adviser.
Emma Knights
Obviously, when clients ask you these questions, you find it quite amusing, as you have been asked them many, many a time now. But would you say they are important questions for clients to ask a new perspective from an adviser. Obviously to see what their future succession plan and things are just so that they would know what would happen with their adviser?
Ralph Hunt
Seriously, I think they are good questions. The first time you get asked you think, oh, because we are in the industry, but when they are continuously the same questions, that means it goes through everybody’s mind. Sometimes when someone says to me, “what happens when you retire?”, I roll out pretty much all of those four questions for them whether they want them or not. That is because I always feel then that maybe in the background, they are thinking about it, but I always think if you have never had a financial adviser, and you get one, they are questions that you should ask. That is because you are fine if they do hold client money because some of them do, we don’t, but some of them do. Also, ask about a succession plan because you want to know someone’s going to be there for you. With the way we are doing it, they get a chance to try before you buy, and I think that is important.
Emma Knights
Thank you, Ralph, for bringing to us those four questions that you often get asked. I am sure you’ll be able to have a think about some other things for a podcast another day where you can bring us some more whimsical things to tell us. Thank you very much for joining us and hope to have you back soon.
Ralph Hunt
Thank you. I will now try and find the door on the way out single-handedly.
Emma Knights
Don’t worry as your carer, I will give assistance. If you’ve enjoyed listening today. Why not head over and join our Facebook group The Money Compass. And if you have any questions for myself or Lukas, drop us a message in this group.